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Brownfields Tax Credit Extension Signed into Law

On May 31, Governor Baker signed the Housing Bond Bill, An Act Financing the Production and Preservation of Housing for Low and Moderate Income Residents (H. 4536), which authorizes $1.8 million in new capital spending for the production and preservation of affordable housing. The bill included one of NAIOP’s top legislative priorities – a 5-year extension of the Brownfields Tax Credit.

The Brownfields Tax Credit, which was set to expire in August without this important extension, encourages new “innocent” owners to clean up contamination. Any party that contaminated a property or owned the property at the time of contamination is not eligible for the tax credit.

Depending on the extent of the completed cleanup, the taxpayer may apply to the Department of Revenue for a credit equal to either 25% or 50% of the cleanup cost. If the site has an Activity and Use Limitation (AUL), then 25% would apply; if no AUL, then eligibility increases to 50%. Without this tax credit, first created in 1998, contaminated properties would remain a public health risk and there would be no incentive to clean up and redevelop these sites.

In addition to the Brownfields Tax Credit Extension, the bill does the following, among other things:

State Low-Income Housing Tax Credit Extension. Extends the state’s ability to commit $20 million per year in tax credits to affordable housing projects until 2025 and authorizes an additional $5 million per year in tax credits specifically to support the preservation of existing affordable housing.

Housing Development Incentive Program Tax Credit. Extends the states ability to commit $10 million per year in tax credits to market-rate housing projects in Gateway Cities until 2024.

The brownfields tax credit extension provisions (Sections 5, 6 and 7 of the Housing Bond Bill) were first filed at the start of the 2017-18 legislative session, at NAIOP’s request, as Senate Bill 1610 by Senator Michael Rodrigues.

NAIOP is grateful to Senator Rodrigues for his leadership on this issue and applauds the housing bond bill conference committee members (Reps. Kevin Honan, Joseph McGonagle, Bradford Hill and Sens. Joseph Boncore, John Keenan, Patrick O’Connor) for championing the brownfields tax credit, which increases housing, creates new employment, and enhances local and state tax revenues by restoring blighted properties to productive use.

While another NAIOP-supported provision that increased the tax credit to 50% for projects with an Activity & Use Limitation and twenty percent of the housing set aside for those making 120% or less of Area Median Income had been included in the Senate version of the bill, that provision was not included in the final bill.

Thank you to NAIOP members that advocated on behalf of this key policy priority for the commercial real estate industry and the Commonwealth.